Can a Director Be Removed During Pendency of Petition?
In the high-stakes world of corporate governance, disputes often lead to petitions for under . A critical question arises: Whether a Director can be Removed from Company during the Pendency of Petition for by him? This issue pits board powers against shareholder protections and judicial oversight by the ). While companies may attempt removals, procedural lapses or oppressive acts can render them invalid, especially amid ongoing litigation. This post analyzes the legal framework, limits, and precedents to guide business owners and directors.
Note: This is general information based on judicial precedents and statutes. Consult a legal professional for advice specific to your situation.
Legal Framework for Director Appointment and Removal
Under Indian corporate law, primarily the , the appointment and removal of directors are governed by the company's Articles of Association and statutory provisions. Typically, shareholders hold the power to remove directors via under Section 169, subject to requirements (at least 14 days). The Board may also have roles, but delegation must be explicit. 2021 0 Supreme(All) 1653
Key principles include:- Statutory Basis: Removal requires compliance with Sections 115 (special resolutions) and 169. For public companies, directors have a right to be heard under similar safeguards.
- Delegation Limits: Managing Directors or officers lack inherent authority to remove directors unless empowered by resolution or law. acts are invalid. 1990 0 Supreme(P&H) 300
The in Haryana Seeds Development Corporation Ltd v. Shri J. K. Aggarwal held that powers of appointment/removal vest in the Board and cannot be delegated unlawfully. 2021 0 Supreme(All) 1653
Effect of Pending Petition
petitions, filed by aggrieved shareholders or directors, seek relief against prejudicial conduct. During pendency before , can the company remove the petitioning director?
Generally, tribunals refrain from interfering in day-to-day operations unless the act is oppressive or violates law. For instance, in one case, a board meeting on 07.06.2024 for director removal was challenged as a blatant violation of the rights of the Petitioner as a shareholder and director. The Tribunal noted it cannot interfere with the day-to-day working of the Company, and further cannot pass any order fo.... 2025 Supreme(Online)(NCLT) 2695
However:- Improper procedures, like failing under Section 169(2), invalidate removals. 2024 Supreme(Online)(NCLT) 1605- Resolutions for removal during disputes may be seen as , e.g., resolutions on 17.04.2024 and 05.06.2024 to remove directors from the Patel Group were labeled oppressive. 2025 Supreme(Online)(NCLT) 4414- may direct if removal is unfair, but powers include removal of the managing director, manager or any of the directors of the company under certain clauses. 2021 0 Supreme(Mad) 3490
Thus, while removal isn't automatically stayed, challenging it within the petition can lead to scrutiny.
Validity of Removal Resolutions and Rules
Even if attempted during pendency, removals must follow strict procedures:- Procedural Safeguards: for removal and new appointments; circulation to all eligible members. Circular resolutions exclude director/auditor removals. provision was made by ss 297 - 303 to enable decisions to be made by written circular resolutions save for removal of a director or the auditor of the company.
- Right to be Heard: Essential for public companies. right to be heard for directors of a public company against removal.
—subsequent approval to validate unauthorized acts—has limits:- Valid only if the act wasn't (illegal from start). 1990 0 Supreme(P&H) 300- Cannot ratify acts by unauthorized persons. could not be invoked to 'ratify' the previous resolutions because it would be a retrospective applicat....
- Conditions: Ratifying body must have original power, full knowledge, and conscious approval. 2021 0 Supreme(All) 1653
In East and West Insurance Co. Ltd v. Mrs. Kamala Jayantilal Mehta, acts lacking jurisdiction were deemed unratifiable. 1990 0 Supreme(P&H) 300
Judicial Precedents and Insights
Courts emphasize competence:- Invalid removals by unauthorized officers are void; no post-facto if . 2021 0 Supreme(All) 1653- Resolutions Nos.1 and 2 for director removal required proper process; tribunals assess powers. 2023 Supreme(Online)(NCLT) 742
cases highlight:- Challenges to removals without notice or hearings succeed if oppressive.
- COC approvals for related resolutions (e.g., remuneration) occur, but director removals face higher scrutiny. 2023 Supreme(Online)(NCLT) 561- Reconstitution via removal is possible but must comply; non-compliance declares resolutions null. 2014 0 Supreme(Bom) 1080
During pendency, attempts like EOGM requisitions for removal may be contested as oppressive acts. 2025 Supreme(Online)(NCLT) 4414
Practical Implications for Companies and Directors
- For Companies: Ensure , hearings, and authority before removal. Avoid during disputes to prevent oppression claims.
- For Directors: Petitioners retain rights; challenge invalid removals via .
- Pitfalls: Cannot cure void acts. Resolutions declared null or void by courts cannot be ratified retroactively. Derived from
Tribunals balance non-interference with fairness, refusing to validate unlawful processes.
Conclusion and Key Takeaways
A director may be removed during a pending petition if procedures are followed, but risks are high. Invalid acts—due to lack of authority, notice, or fairness—cannot be ratified if . precedents underscore strict compliance with , protecting against oppressive removals. 1990 0 Supreme(P&H) 300 2021 0 Supreme(All) 1653
Key Takeaways:- Removal requires competent authority and statutory procedure; failures invalidate it.- Pending petitions amplify scrutiny; tribunals may intervene if oppressive.- fails for illegal/unauthorized acts.- Prioritize governance to avoid litigation.
References:- 1990 0 Supreme(P&H) 300 2021 0 Supreme(All) 1653-
2025 Supreme(Online)(NCLT) 2695 2023 Supreme(Online)(NCLT) 742-
2023 Supreme(Online)(NCLT) 561- 2025 Supreme(Online)(NCLT) 4414 2024 Supreme(Online)(NCLT) 1605 2021 0 Supreme(Mad) 3490- 2014 0 Supreme(Bom) 1080
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